Business relation ships in japan

Conflict Negotiations
(final paper)
Moscow State University
(International College)
BUSINESS RELATIONSHIPS IN JAPAN
Business relationships in Japan are characterized by a well-
structured hierarchy and a strong emphasis on nurturing personal contacts.
Generally, they are built up over long periods of time or are based on
common roots, such as birthplace, school or college. Also, an unusually
strong emphasis is placed on social activities to strengthen ties. It is
not surprising, therefore, that those looking in from the outside may see
the Japanese business world as comparatively hard to break into. In fact,
there are many different kinds of business relationships, but most share
two features - they have been built up slowly and carefully, and much time
is spent in keeping them up to date.
Business relationships in Japan are part of an ever-broadening circle
that starts within the company (uchi - inside, or"us"), and moves towards
the outside (soto) to include related companies, industry or business
organizations, and the like.
Most Japanese companies have a series of very close relationships
with a number of other companies that provide them with support and a
multitude of services. It has been traditional practice for a company to
hold shares in these "related" companies, a practice which has given rise
to a high proportion of corporate cross-share holdings in Japan. This has
been a show of faith on the part of one company towards another, and also
has been useful in providing companies with a core of stable and friendly
shareholders.
When dealing with a Japanese company, it is important to be aware of
the existence and nature of some of these close relationships, in
particular those with banks and trading companies. Understanding these can
help to define the nature of the company and the way it does business, as
well as its positioning in the Japanese business world. It should also be
understood that there is a constant flow of information between Japanese
enterprises and their banks and trading companies. Unless the need for
confidentiality is made very clear, these may soon be aware of any
negotiations in which the company is involved.
Larger corporate groupings are becoming more familiar to non-Japanese
business circles. These groupings are known as keiretsu, and some have
their roots in the large pre-World War II conglomerates. Accusations of
keiretsu favouritism overriding more attractive outside offers sometimes
are levelled at Japanese companies. When asked about this practice by a
foreign businessman, the president of a large Japanese electronics company
replied: "It's like going to the tailor your father went to. He may be more
expensive than the competition and perhaps even not the best, but he has
served your family well for many years and you feel duty bound to remain a
faithful customer." There is a tendency in Japanese business to be guided
by the familiar and human considerations, and thus it is important for
anyone wishing to do business in Japan to go a major part of the way in
establishing a communications network and a real presence.
Business Negotiations & Meeting Etiquette
Face to face contact is essential in conducting business. It is more
effective to initiate contact through a personal visit (set up by an
introduction through an intermediary) than through correspondence. Initial
contacts are usually formal meetings between top executives; more detailed
negotiations may be carried out later by those who will be directly
involved. During the first meeting, you get acquainted and communicate your
broad interests; you size each other up and make decisions on whether
ongoing discussions are worthwhile. At this point you should not spell out
details or expect to do any negotiating.
Exchange business cards (meishi) at the beginning of the meeting. The
traditional greeting is the bow. Many Japanese businessmen who deal with
foreign companies also use the handshake. If you bow, then you should bow
as low and as long as the other person, to signify your humility. First
names are not usually used in a business context. In Japan, the family name
is given last, as in English. You should address Yoshi Takeda as "Mr.
Takeda" or "Takeda-san." Expect to go through an interpreter unless you
learn otherwise. If meeting high-ranking government officials, an
interpreter is always used even if they can speak English fluently because
customarily, they refrain from speaking foreign languages in public. Other
businessmen may speak some English but may not be adequate for undertaking
business negotiations.
Exchanging meishi
Conservative dress is common for both men and women in public. Most
Japanese professionals wear Western-style dress (European more than
American), although during the hot summer months, men often do not wear
suit jackets.
Concern about how others perceive you pervades business and social
communication in Japan. Since saving and losing face are so important, you
should avoid confrontation or embarrassing situations. A distributor that
cannot follow up on a promise made to a customer loses face and may suffer
damages to its reputation. Remember, if you are supplying distributors in
Japan, to deliver on time (especially if they are samples) or else face a
long chain of lost faces and apologies. An error or delayed shipment, even
if it is not your fault, may damage your company's reputation with the
Japanese company you are dealing with as well as all the companies and
customers that Japanese company does business with. Following through on
promises and agreements, both oral and written, is of utmost importance and
when you cannot do this you will have to swallow your pride and apologize
profusely until you are forgiven. This is all part of common business
practice and you may see business people (including top executives) on
their knees apologizing. When in Japan be ready to include this as a part
(hopefully not regular part) of your own business practice.
Nonverbal communications - gestures, nuances, inferences - are very
important in signaling intentions. "No" is seldom said directly, and
rejection is always stated indirectly. Remember that the Japanese hai means
"Yes, I understand you" rather than "Yes, I agree with you." The Japanese
will sit in silence for some time - it is a way to reflect on what has been
said. Early business and social contacts are characterized by politeness
and formality.
The Japanese like to launch new products or take other important
initiatives on "lucky days." The luckiest day, called the «taian», occurs
about every six days. Your Japanese counterpart will probably want to delay
a major announcement until the next «taian». Japanese calendars usually
indicate these days.
The presentation of a new product is traditionally followed by a
reception with the product on display; an omiyage, or gift, is given to
each attendee. This adds to the overall cost of the event.
Japan epitomizes the rule "Make a friend, then make a sale." When
selling to or negotiating with the Japanese, do not rush things. the
Japanese prefer a ritual of getting to know you, deciding whether they want
to do business with you at all, instead of putting proposals on the table,
and seeing whether agreement is possible within a broad framework.
The Japanese prefer to close with a broad agreement and mutual
understanding, preceded by thorough discussion of each side's expectations
and goals. If they decide they want to do business, they will negotiate the
details with you later.
A Japanese negotiator cannot give a prompt answer during an initial
discussion. No commitment can be made until the group or groups he or she
represents reach a consensus. Do not expect an immediate answer.
Negotiations may take an extended period.
Japanese executives emphasize good faith over legal, contractual
safeguards. They are not in the habit of negotiating detailed contracts
that cover all contingencies. However, Japanese managers who are accustomed
to Western business dealings are familiar with more structured contracts.
In case of disputes, the Japanese prefer resolving issues out of court on
basis of the quality of the business relationship.
A Japanese partner or customer will usually prefer to develop a
business relationship in stages, with a limited initial agreement that, if
successful, is gradually extended into a broader, more binding agreement.
So once you make a commitment, expect it to be for a long time. If you
break it, your reputation will be affected and everyone will know. It may
be difficult to find another Japanese partner after this happens.
Sources
1. Internet (Alta Vista, Lycos)
2. Boye D Mente «Business guide to Japan. Opening doors... and closing
deals!»,1998